On November 21, 2024, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $12,000. The following information was available from the records of Hodge’s periodic inventory system:

Based on recent history, Hodge’s gross profit ratio on Product Tex is 35% of net sales.

Required:
Calculate the estimated loss on the inventory from the fire, using the gross profit method.

Transcribed Image Text:

Inventory, November 1, 2024 Net purchases from November 1, to the date of the fire Net sales from November 1, to the date of the fire $100,000 140,000 220,000